Many companies today perform high level corporate planning (customer P&L planning) and tactical Trade Promotion Management (TPM) event level planning in two different systems. This is a major factor in the ‘disconnect’ between original budgets, revised planning, and the detailed planning that exists within the TPM system. In most cases, once the detailed plan is created, there are no controls or processes to ensure that it is connected to your overall corporate plan. The breakdown between these two systems can often result in TPM overspends and plan shortfalls.

Guiding Principles to Planning

One of the keys to effective planning is to have a system that permits you to establish goals, and then set the related tactical event plans to execute your plan objectives. This would include goals such as market share by brand, customer profit margin, and other similar metrics.

Another critical key is to connect the corporate plan to the tactical event plan, which requires that you first decide on the level of planning for both corporate and the event level planning. Typically, your corporate plan is performed at a customer and product summary level. This allows for more of a macro planning approach, in which you can perform ‘what ifs’ and quickly determine the changes in pricing, costs, and the impact to overall profit. This permits users to set goals, and then create tactical event plans to meet these goals. Top down planning using allocation methods are essential to create quick directional views that subsequently provide for an iterative process.

Clearly, setting your customer and brand-level tactics is not something you want to first perform at an event level, as you must first determine if your volume, pricing and related costs will derive your desired results.

Once your goals have been set, and you have created your plan, the next step is to ‘connect’ this plan to your detailed tactical event level plan. A seamless process must also exist so that base volume, lift volume and related spending at the corporate level are truly connected at the event level. This means that downstream tactical event level changes are managed, recorded and summarized back to the corporate planning level, thus keeping the respective systems synchronized.

Additionally, trade spending controls are implemented at the tactical event level providing the account manager and senior management with an understanding of how the tactical plans will impact the higher level strategic planning goals and KPI’s. This is done through an effective trade funds management (TFM) process that assigns tactical event funding from one or more trade spending budgets/funds.

Building in the Proper Controls

Proper controls must be implemented throughout the planning process. Controls such as spending limits, spend per unit, and related lift-to-cost ratios are all essential to forcing compliance and approvals throughout your process. This reduces the work flow time from contract initiation through approval and finally through resolution.

Best practices such as…

Having a rule-based system, allows for a streamlined process, where only outliers require oversight.

Providing visibility to historical pricing and to protect against margin erosion

Connecting actual settlement spending with specific tactical events

…all provide important processes, metrics and overall controls to connect Corporate and Event planning, while providing the efficient workflow processes.

About the Author:

Rick Pensa is the president/CEO of CPGToolBox.com, LLC and has more than 23 years of focus on the Trade Promotion Management process, TPM analytics and system implementation in the CPG industry. CPGToolBox.com, LLC is focused on providing sales and marketing tools built on the Force.com platform.

Tim Vollman is the president of S3 Mobility and has spent more than 25 years focused in Corporate Planning, Trade Promotion Management, and related Business intelligence systems. Mr. Vollman has founded three software companies in the Planning/ Optimization sector.